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First Nature vs. Second Nature Causes: Industry Location and Growth in the Presence of an Open-Access Renewable Resource

Rafael González-Val () and Fernando Pueyo ()

MPRA Paper from University Library of Munich, Germany

Abstract: In this paper we present a model integrating characteristics of the New Economic Geography, the theory of endogenous growth and the economy of natural resources. This theoretical framework enables us to study explicitly the effect of “first nature causes” in the concentration of economic activity, more specifically, the consequences of an asymmetrical distribution of natural resources. The natural resource we consider appears as a localized input in one of the two countries, giving firms located in that country a cost advantage. In this context, after a decrease in transport costs, firms decide to move to the country with the greatest domestic demand and market size, where they can take more advantage of increasing returns, despite the cost advantage of locating in the South, due to the presence of the natural resource.

Keywords: industrial location; endogenous growth; renewable resource; geography (search for similar items in EconPapers)
JEL-codes: O30 R12 Q20 F43 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-env and nep-ure
Date: 2009-11-12
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Working Paper: First nature vs. second nature causes: industry location and growth in the presence of an open-access renewable resource (2010) Downloads
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